Page 31 - Bespoke EPG 2017 Digital

Donations

■■ An estate planner may donate one of his assets or cash to another and so
reduce his estate during his lifetime, creating an estate duty saving.

■■ Donations are regulated by the Income Tax Act, which provides that:

◆◆ Donations tax is payable by any individual living in the Republic of South
Africa, or any South African company or one managed or controlled
in the Republic, on the value of any gratuitous disposal of property,
including the disposal of property for inadequate consideration and the
renunciation of rights.

■■ Donations are subject to donations tax, at a flat rate of 20% on the value of
the donation.

■■ Donations tax is payable by the end of the month following the month of the
donation.

It is important to note which donations are exempt from donations tax, when the
estate planner considers whether to include donations in his estate plan.

Principal exemptions

1. Donations between spouses.

2. Donations to charitable, ecclesiastical and educational institutions, and
certain public bodies in the Republic of South Africa, limited to certain
thresholds

3. Donations by natural persons not exceeding R100,000 per year

4. The donation of assets situated outside the Republic, subject to certain
conditions

5. Donations by companies not considered to be public companies up to
R10,000 per annum

6. Donations where the donee will not benefit until the death of the donor

7. Donations made by companies which are recognised as public companies for
tax purposes

8. Donations cancelled within six months of the effective date

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